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Obamacare at the Supreme Court, Day One: Rapid Reactions

WASHINGTON, DC - MARCH 26: Ron Kirby holds a sign while marching in protest of the Patient Protection and Affordable Care Act in front of the U.S. Supreme Court on March 26, 2012 in Washington, DC. Today the high court, which has set aside six hours over three days, will hear arguments over the constitutionality President Barack Obama's Patient Protection and Affordable Care Act. (Image credit: Getty Images North America via @daylife)

Today, the Supreme Court heard oral argument on whether or not Obamacare’s individual mandate is a tax, or a penalty. This matters, because if the mandate is a tax, the suit has to be thrown out. (You can’t sue the government about a tax until the tax goes into effect, whereas you can for a penalty. The mandate doesn’t go into effect until 2014.) My pre-game preview is here. I’m running a live blog over here. I’ll have another live blog tomorrow for Day Two. I’ll update this post as frequently as possible.

I spoke to David Hogberg of Investors’ Business Daily, and Randy Barnett, constitutional law professor at Georgetown, and originator of the legal arguments against the mandate. Here are my notes on my quick phone conversations with the two of them.

David Hogberg: “They all pretty much came down on the penalty side. There was some aggressive questioning as to why this is not a tax, but you never really got the sense that any of them wanted to use the AIA to avoid the case for the time being.

“Even some of the more liberal justices, Robert Long, who was the outside attorney who argued the tax portion, they hit him pretty hard. You could tell by the questions that they were asking, they just didn’t buy that this was necessarily a tax.

“The best that Long could come up with is, that it’s collected like revenue [by the IRS], but they weren’t buying it.”

Randy Barnett: “They looked as unanimous as they could possibly look on the case.” I asked Randy: if it’s so obvious that the mandate is a penalty, and not a tax, why did they bother to spend 90 minutes examining it? “It was absolutely essential that they hear the arguments, once the Fourth Circuit ruled that it was a tax. Law professors would have jumped all over them.”

“There was a good deal of skepticism on the tax power theory. At the beginning I would have said they were unanimously unsympathetic; I wouldn’t have been so confident at the end. So I really would expect them to decide this case on the merits, on the Commerce Clause and Necessary and Proper clause.”

Statement from Karen Harned, executive director of the NFIB (National Federation of Independent Business) Small Business Legal Center:

“It was a great day for small businesses. Bottom line is that there was healthy skepticism on the part of most, if not all, of the justices on whether or not the Anti Injunction Act warrants challenge at this time. We feel good about our chances of the court going to the merits of whether or not the individual mandate is constitutional. We’re looking forward to arguments tomorrow.”

Statement from Professor Randy Barnett, Legal Counsel for NFIB:

“Most of the justices seem skeptical of the claim that the mandate and penalty are a tax. They seem ready, willing, and able to reach the merit of the commerce clause claim.”

The Justices had tough questions for amicus lawyer, Bob Long, who faced the uphill task of arguing the TAIA applies to this case. Both the federal government and the law’s challengers disagreed.

But the tone and word selection of the Justices in today’s Q&A would lead us to believe the Court will not likely apply the TAIA here. A few notable points from the Justices:

Justice Ginsberg: “The Tax Injunction Act does not apply to penalties that are designed to induce compliance with the law rather than to raise revenue. And this is not a revenue-raising measure, because, if it’s successful, they won’t — nobody will pay the penalty and there will be no revenue to raise.”

Justice Kagan: “You are trying to suggest that the statute says: Well, it’s your choice; either buy insurance or pay a — or pay a fee. But that’s not the way the statute reads. And Congress, it must be supposed, you know, made a decision that that shouldn’t be the way the statute reads, that it should instead be a regulatory command and a penalty attached to that command.”

Justice Alito (directed to federal government lawyer General Verrilli): “General Verrilli, today you are arguing that the penalty is not a tax. Tomorrow you are going to be back and you will be arguing that the penalty is a tax. Has the Court ever held that something that is a tax for purposes of the taxing power under the Constitution is not a tax under the Anti-Injunction Act?”

UPDATE 4: Richard Epstein and David Hyman have put out a white paper on how Obamacare damages the market for private insurance: something that becomes especially relevant if the mandate is struck down.

The highlight of the session was when President Obama’s Solicitor General, Donald Verrilli, got up to articulate the Administration’s position, which was that the mandate wasn’t a tax, for the purposes of the Anti-Injunction Act, and yet also that “the minimum coverage provision of the Affordable Care Act is an exercise of Congress’ taxing power.”

To which Justice Alito said: Huh?

“General Verrilli, today you are arguing that the penalty is not a tax,” Alito said. “Tomorrow you are going to be back and you will be arguing that the penalty is a tax. Has the Court ever held that something that is a tax for purposes of the taxing power under the Constitution is not a tax under the Anti-Injunction Act?”

“No, Justice Alito,” replied Verrilli.

Verrilli kept misspeaking, describing the “penalty” as a “tax.” “Why do you keep saying tax?” asked Justice Breyer, after which Verrilli started referring to the mandate as a “tax penalty.”

Other justices came up with their own terminology; Justice Ginsburg repeatedly referred to the mandate as a “must-buy provision.”

On a conference call after the session, Virginia Attorney General Ken Cuccinelli did not mince words. Verrilli’s gymnastics were “the precursor to the kind of postmodern language-twisting the federal government will have to do to win this case,” he said, according to Ben Domenech, who was on the call. “Noah Webster may be the toughest challenge for the feds to overcome in this case.”

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